A fourth propulsion revolution to end the shipping industry’s dependence on fossil fuels will be required but many hurdles need to be overcome -- including research and development of zero carbon fuels -- before full decarbonization is achieved, the International Chamber of Shipping said.

"The shipping industry accepts that it needs to reduce its carbon footprint," the ICS, which represents 80% of the merchant fleet, said Nov. 11.

To that end, a number of interim measures have been identified to reduce the industry’s carbon footprint including improved ship designs, increased operational energy efficiency measures and the introduction of lower-emission fuels such as LNG, it said.

In 2019, maritime shipping consumed 221 million mt of oil-based derivatives, mainly heavy fuel oil and diesel, the daily equivalent to almost 4 million b/d of crude oil, according to the International Energy Agency.

The IEA estimated that by 2070, oil and gas will be responsible for just one-sixth of shipping fuel consumption.

R&D to catalyze decarbonization

Several promising potential zero-carbon fuels and technologies exist, including ammonia, hydrogen and electric batteries, the ICS said, though they needed to be developed further to become commercial viable.

If the global fleet all adopted green ammonia fuel, ammonia production would have to rise by 440 million mt -- more than treble current production and requiring 750 GW of renewable energy, it said. That meant shipping alone would consume 60% of the world’s current renewable energy production of 2,537 GW.

"The battery challenge is just as great: a typical container vessel would require the power of 10,000 Tesla S85 batteries every single day meaning that it would require 70,000 batteries in order to sail for a week," the ICS said.

Hydrogen emits no carbon but its current commercial production emits large amount of greenhouse gas, negating its green credentials, the ICS said, adding research was under way to prevent that.

Similar to ammonia, fuel density is poor, and a new bunkering system would also be required, it said, adding that hydrogen use could reach 12 million mt in 2070, equivalent to 16% of 2019 global maritime bunker demand and 16% of today’s global hydrogen use.

"Trillions of dollars of investment will rely on the success of such initiatives to identify the right zero-carbon technologies of tomorrow," it said.

Therefore, an industry proposal for the creation of a $5 billion research and development fund paid for by a levy on marine fuels, to be overseen by the industry’s global regulator -- the International Maritime Organization -- is a welcome move as it would aid zero-carbon fuels and technologies to achieve the size and scale needed to catalyze this revolution, ICS said.

"ICS believes that a global fund, once adopted by the IMO, can be established quickly. Other stakeholders such as energy producers, ship builders and engine manufacturers are likely to want to contribute via co-funded projects supported by this major R&D program, potentially generating substantial additional funding for R&D for zero-carbon technologies."

Benefits

Shipowners themselves will be beneficiaries despite the major investments, the ICS said. As the world moves towards a green economy, charterers will come under pressure from their clients to use ships with green credentials, it said.

Some industry sources based in Singapore said separately that they were already seeing an increasing number of inquiries from charterers for LNG-fueled vessels.

Meanwhile, financiers were emerging to fund green ships, which could only help accelerate the pace of decarbonization, the sources said.

Separately on Nov. 11, Singapore's PSA Marine said it had been granted a three-year Eur30 million ($35.5 million) equivalent sustainability-linked loan from DBS Bank, the first of its kind granted to a company in Singapore’s maritime industry. The investment will help the company forge ahead with offshore wind energy-related activities in Europe, it said.

Since 2018, DBS has done around 100 sustainable finance deals worth over S$15 billion ($11 billion) and has committed to financing S$20 billion in renewable, clean-energy and green projects by 2024, it said.

The Poseidon Principles were also a positive signal to promote greener shipping, sources said. The Poseidon Principles are the world’s first sector-specific, self-governing climate alignment agreement among financial institutions. The Principles now cover over $150 billion in loans to international shipping.